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Black Friday has come and gone. Cyber Monday is behind us, too. But if you are like most consumers, there’s still a fair amount of holiday shopping to be done, and if you’re not careful it could be your financial undoing.

According to The Conference Board’s Consumer Confidence Survey, families plan to spend an average of $563 on gifts in 2016. It’s a slight dip from the previous year, but for our purposes, the number is fine. The key word here is “plan.”

It doesn’t really matter whether you intend to spend $500 or $5,000 — the road to financial hell is paved with the best intentions. The biggest problem consumers face is sticking to a financial plan — both in the long-term sense of getting ready for retirement and in the short term regarding everyday purchases. The holidays are not only a time for cheer but also difficult choices.

The one-two punch of holiday travel and entertainment coupled with what is too often a frenzy of holiday shopping needs to be included in any financial road map. When consumers fail to think through their finances (and by “think,” I mean write out an actual budget with real numbers), Mike Tyson said it best: “Everybody’s got a plan until they get punched in the mouth.”

According to Experian, 31% of consumers said they had gone into debt because of unexpected holiday purchases, and 56% said they spend too much during the holiday season.

A full 30% of most credit scores are based on how much of your available credit you utilize. And carrying debts over 30% will negatively impact your credit. (Not sure where your finances stand? You can view two of your free credit scores, updated every 14 days, on Credit.com.)

So, what should you do?

Personal Finance Best Practices

If the road to hell is paved with best intentions, the road to personal finance heaven is paved with best practices.

One of the biggest issues debt-saddled consumers face is the way they use their credit cards. If you take away only one thing from this article, I hope it will be this: A well-managed credit card should be seen as a growing asset and not an expanding liability. However, a poorly managed credit card can be a weapon of individual destruction.

When the major stock market indexes enjoy record highs — as they are currently with the holiday season upon us — buying power for those with money invested in stocks is stronger than usual. But the markets can be fickle and what was yesterday’s paper-boom time is tomorrow’s bearish boondoggle.

The only sure thing about financial markets — beside the fact that the house always wins — is that you can never be sure. The odds in the credit card business are also stacked in favor of “the house,” but for a much wider swath of consumers they can offer a sound investment opportunity as well.

Sure there is risk, but the consumer has control over it. The greatest risk, after all, is a lack of discipline — or a reality principle. To manage credit correctly, you either need to have an internal pause button when you’re shopping based on an established plan, or you need to be comfortable with the basic math of what you can afford.

It’s that simple.

Thinking about credit as an investment may help you avoid using it to purchase things you can’t afford. Credit cards need to be managed like a stock portfolio or a retirement fund — a convenient way to move cash in your possession, or that is reasonably expected to be soon. When you do that reliably, you will be viewed as someone who can handle access to more credit, and if you manage that well, opportunity calls.

Let That Sink In

Things you can’t afford — that’s a real category. It’s also a bummer.

It makes a credit card seem like a Holy Grail sometimes — a magical piece of plastic encoded with your personal information that makes the unaffordable, for a brief moment in time, yours. But that same piece of plastic and code can pave the driveway to a new home, if you treat it right (and there are concrete ways to build your credit).

Your best bet: Use your credit card as if it were a debit card, but don’t use your debit card instead. A debit card is the gateway to your bank account, and as such a bigger inconvenience should it be compromised in a breach, lost or stolen. And, in addition to the chance to build your buying power and credit score, some credit cards, like cash back credit cards, offer opportunities to earn rewards.

Image: Dinic

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